The growth rate in retail fraud appears to have surpassed the growth rate in e-commerce transactions over the 2016 holiday season, according to a new survey by Naples, Fla.-based electronic payments provider ACI Worldwide.
The data, which was based on hundreds of millions of transactions from global merchants, revealed that fraud attempts grew by 31% in the period between Thanksgiving and Dec. 31 for the 2016 holiday shopping season versus the same period in 2015. The number of e-commerce transactions grew by 16% during that time, the study said.
“Over the 2016 holiday shopping season, merchants experienced significant growth in their digital channels, coupled with a substantial increase in fraud,” ACI Worldwide SVP of Platform Solutions Markus Rinderer said. “Given the consistent and alarming uptick in fraudulent activity on key dates, merchants must be proactive in their efforts to identify weak points — and define short and long-term strategies for improved security and enhanced customer experience.”
Attempted fraudulent transactions are those in which merchant verification confirms the transaction is fraudulent, the transaction data matched information being sold online or reported as fraudulent by an issuer, or are transactions that match a pattern of confirmed fraudulent behavior.
ACI also reported that Cyber Monday and Black Friday saw big increases in year-over-year retail transaction volume. Cyber Monday transactions were up 15%, and Black Friday transactions were up 19%.
Fraud attempts were especially high on Christmas Eve, according to the study. In 2016 overall, about 1% of online transactions were fraudulent attempts, but on the day before Christmas the rate surged to 1.6%. Fraud attempts also swelled to 1.5% of all transactions on shipment cut-off days and to 1.7% on express shipping cut-off days, according to ACI. Those shipment deadlines, as well as the growing option to buy online and pick-up in-store, drove the spikes, ACI said.
During the 2016 holiday shopping season, one out of every 97 transactions was a fraudulent attempt. In 2015, one out of every 109 transactions was a fraudulent attempt, the survey reported.
Online retail shows no signs of slowing, however — especially during the holidays.
Holiday retail sales— both online and in-store — during November and December rose 4% over 2015 to $658.3 billion, according to new data from the National Retail Federation. But NRF also said it expects e-commerce sales during the holiday season to be on par with recent quarterly releases showing 16% growth year-over-year. It also said online and other non-store sales increased 12.6% year-over-year for November and December.
“In the new distributed commerce world that allows consumers to buy any product, anytime, anywhere, it really doesn’t matter whether a customer shops in a company’s store or on its website or mobile app,” NRF President and CEO Matthew Shay said in a release last week. “It’s all retail. Today’s retailers sell to shoppers any way they want to buy.”
According to the ACI recent data, criminals did take a stab at spending less of other people’s money each time they went shopping in 2016 — the average ticket price of an attempted fraud transaction fell by 7% to $228 in 2016, versus $243 in 2015. Cheaper shipping, less expensive electronics and good promotions apparently drove that trend, ACI reported.
